The other day a Cobb County school system employee (not a teacher) lamented that they hadn’t received a pay raise in several years while their health insurance and other costs have continued to go up. I expressed some sympathy and asked this person what they thought of Obama’s proposal to raise the minimum wage from $7.25/hour to $9. Somehow it just didn’t seem right to this person, which was accompanied by all the usual arguments that it would kill small businesses. What made this conversation particularly interesting was how it illustrates the human side to all of us, that some of us are more deserving than others, that some of us have “earned” their government largess, and that it is the other folks out there who are looking for handouts. As I pointed out in last week’s commentary, the congress and legislatures decide and define what the word earn means, and it doesn’t always mean the same thing.

Approximately 15 million people earn a minimum wage. Statistically, the poor don’t live as long as those better off, and all too many that pay the mandatory FICA on their minimum wage won’t live long enough to collect Social Security or Medicare. These same people have either no healthcare or the bare minimum, and many use their bodies to make their livings. By the time they hit their fifties they have all sorts of medical conditions from repetitive motion jobs or manual labor. But one of the Republican proposals for getting control of the Social Security and Medicare costs is to raise the eligibility age. Yet the majority of Medicare’s costs occur in the last few months of a patient’s life, and most would be considered old at that point. In actuality, this suggestion to raise the age is a sham to fool the American people into thinking that their esteemed representatives and senators are doing something meaningful to fix the problem.

But back to the minimum wage hike that the president has proposed. I can’t imagine why most reasonable people wouldn’t be willing to pay a nickel or dime more for a cup of coffee, a quarter or half dollar for a pizza, and the same for a movie ticket and every other service industry that employs minimum wage workers. If you do the math on how little these workers are paid on an annual basis, I can only wonder how they survive. So as to remove one rejoinder from a reader who would point to the workers who aren’t motivated to do better, I’m not talking about them. Anyone unwilling to improve themselves should live with their choice. I am talking about those that for a variety of reasons are stuck in these jobs. I don’t have a figure for it, but I wonder how many veterans are only earning minimum wages through no fault of their own.

Raising the minimum wage by all of $1.75/hour would have a multiplier effect. That money will get spent for sure. The earner still won’t be able to save any money from it, especially if they have a family. All of that small amount of cash will go right back into the economy. There are any number of anecdotal stories of how a hike will kill this or that business, but I have read that some states which have imposed their own minimum wage have not experienced higher unemployment. Even Mitt Romney supported raising the minimum wage and indexing it to inflation. Those people that receive any type of government benefit, those who receive COLAs, if they oppose the less fortunate making a paltry addition to their pay, they should look in the mirror and ask what makes them so special and entitled.

Devlin, Your questions are fair and poignant. I wouldn't focus on the percentage of increase so much. If you double a penny, it's a 100% increase, but not much has changed. Several things worth considering and factoring into all of this: 1. A business can take a tax deduction for the increase. Admittedly it's not a hundred percent tax credit, but the deduction would offset some of the cost. 2. How do businesses and consumers manage when the price of gas goes up? When the price of food products go up? When the myriad of other business costs go up? Why are the bottom end workers the last to be considered?

Up until roughly the early 1980s, the disparity between C-level employees and workers was about 40:1. Today it approaches 240 (or more):1 Who's paying for those whopping costs? As consumers of products and services, we are all paying for those salaries and benefits. And don't forget too that a huge percentage of the C-level income is not taxed as income but structured to gain a much lower tax advantage. Proportionatley, the minimum wage worker is paying a very disproportionate percentage of his wages for FICA even if there may be minimal to no tax consequences.

As you rightly pointed out, this is a complicated issue, one that needs some healthy debate. I just wanted to present another side of the argument. Thanks very much for your input.

Devlin Adams

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February 16, 2013

Good points, Oliver. As an aside, and totally irrelevant, back when I first started to work, the minimum wage was much less than the proposeed INCREASE.

While an adjustmetn inthe minimum is probaly a good thing, I wonder at the magnitude of the icnrease, in realtion to percentages.A coule of questions come to mind.

1. What will be the affect on companies that employ minimum wage earners, when they are hit with a 24% increase in labor costs, with no offsetting decrease, and no increased productivity?

2. What will be the ramifications on the workers themselves, of handing them an unearned 24% increase in earnings, with no requirement for

better or more efficient output?

3. What will be the reaction of the general publc, when they are faced with increases in prices, as a result of this raise. Particularly those peopel living hadn to mouth now, and whoa re not covered by this increase?

The issue is not as simple as it might appear on the surface.

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